Low profits expected as property companies count losses
Locally listed property companies have told their shareholders to expect reduced profits as a result of recent Covid-19 lockdowns as shops were closed for almost two months.
New African Properties (NAP), whose flagship properties include Riverwalk shopping mall in Gaborone, has told its shareholders that it expects its profits before to be between 25 percent to 35 percent (P52 to P73 million) below the P209 million reported for the prior year.
The decline is reportedly due to the impact of the non-distributable components of profits before tax.
As a result, NAP anticipates profit before tax to be between P136 million and P157 million for the year ended 31 July 2020.
Turnstar, one of the leading property outfits has reported that a strategic decision was made to grant substantial rental concessions to its commercial tenants who could not operate during the first lockdown.
The company, whose properties include Game City mall, says it considers its tenants as partners in its business and their existence and continuity are paramount in the success of Turnstar.
As a result of such a decision, Turnstar says the rental revenues of the Group reduced by approximately P12,27m (9.15 percent) during the half-year to 31 July 2020, compared to the corresponding half-year ended 31 July 2019.
Turnstar also has other properties in Tanzania where business was disrupted as well die the outbreak of the Covid-19 pandemic.
The Group’s profit before tax, for the half-year ended 31 July 2020, is expected to be lower by approximately 38 percent (P26.5m) from P 69,660m for the half-year ended 31 July 2019 to approximately P 43,167 million for the half-year ended 31 July 2020.
Of this amount, P12.27m pertains to the rental rebates granted during the Covid 19 lockdowns, whilst P13m relates to the unrealized forex exchange loss.
However, Turnstar says it is to be noted that, the exchange difference on translating foreign operations has substantially increased from P 20.1m for the half-year ended 31 July 2019 to approximately P 44.2 m for the half-year ended 31 July 2020.
As a result, the Profit after Tax – Total comprehensive income for the half-year ended 31 July 2020 is largely on par with that of the previous half-year ended 31 July 2019.
Turnstar did not pay a final dividend for the year ended 31 January 2020 but says the current and forecasted cash flows indicate that the Company can comfortably; resume the payment of dividends, as had previously been the case traditionally.
Meanwhile, Letlole La Rona (LLR), whose property is mostly industrial, has reported a surge in profit before tax which increased by 24 percent to p79.9 million and has seen its investment portfolio reach P961 million, despite the Covid-19 pandemic.